Going through a divorce is normally an unpleasant period, though for some couples who split amicably, it can be a lot smoother. Instead of appealing a family court decision, you can solve the issue in a much smoother way. You will likely have a lot on your mind and to sort out, with the dividing up of properties, assets, finances and arranging the best future possible for your children, if you have any. One important aspect to consider is the impact which a divorce can have on your credit score.
Will Divorce Affect My Credit Score?
Divorce does not directly damage or improve your credit score. This is because your marital status is not included in any credit report and isn’t factored into determining your credit score. However, divorce can indirectly affect your credit score and report depending on the outcome and if it results in any financial troubles.
Poor management and planning for the future can see your credit score deteriorate. There may be a loss of one financial income which you need to prepare adequately for. This is especially important if you will be living in the same property, as it could impact your ability to afford bills, credit cards or loans.
Sorting Out Joint Debts and Accounts
Any joint accounts and bills you share can hurt your credit score if your ex-spouse refuses to pay their share of them. The common thing to do with a joint account will be to close it, but there may still be some outgoing bills that need covering. If one half of the couple stops paying into the account or covering their share of the bills, it can lead to missed payments and negatively affect your credit score, which can be unavoidable when it’s in your name..
Hopefully, you’ll be on good enough terms that both sides hold up their part of the financial agreement. If not, you’ll have to check that all the bills are being covered and pay for them yourself whatever the case, to avoid your credit rating falling.
Protect Your Credit After a Divorce
Maintaining a positive payment history and reducing your debt are essential to protect your credit rating both during and after a divorce. To do this it’s important that you adjust your lifestyle in reaction to a reduction in income. This could mean selling your house and downsizing to a smaller property, changing your car and more.
Cut your financial ties to your ex-spouse as soon as possible, cancel credit cards and refinance loans into their and your names separately, to avoid their actions having a negative impact on your credit score.
This way you can protect your credit score in as best a way as possible so that you come out of the divorce in as strong a financial position as possible.
